The Dow Jones Industrial Average
($INDU) may set a new record perhaps as soon as Tuesday -- as investors shrug off concerns over sequestration, turmoil in Europe and worries that China is on a new campaign to cut property inflation.

The Dow finished Monday up 38 points to 14,128, its second-highest close ever. The blue-chip index finished about 37 points below its all-time closing high of 14,164.53, set on Oct. 9, 2007.

The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) also finished higher.

Futures trading suggests a small gain at the open on Tuesday. The day will feature a key economic report -- the monthly report on the non-manufacturing economy from the Institute for Supply Management.

In addition, diet company Nutrisystem (NTRI), juice-retailer Jamba (JMBA) and gun-maker Smith & Wesson Holding (SWHC) will report quarterly results. This is a week dominated by economic reports, with none more closely watched than Friday's jobs report. The report, due out before the stock market opens in New York, is expected to show the nation's unemployment rate at 7.9%, with 155,000 payroll jobs created during February.

Economists at IHS Global Insight think the payroll number will come in at 145,000. IIHS believes the February blizzard that hit the Northeast slowed job creation.

Even if the numbers are stronger than expected, the market reaction may be muted -- due to concerns over what a protracted sequestration may look like. Sequestration is the name given for automatic spending cuts mandated by the 2011 budget deal between Congress and the White House.

The cuts have been forced when House Republicans refused to consider any proposals to boost tax revenue. The cuts will fall on defense and non-defense spending with a 2% trimming of Medicare spending as well.

The effects of the cuts will come over time, with the Obama Administration estimating some 750,000 jobs in the private and public sectors could be lost.

Also due this week is a jobs-related report, Wednesday's ADP National Employment Index, which looks at trends in private-sector employment. 

In addition, the Federal Reserve will release its Beige Book report on Wednesday afternoon. It is a narrative look at the economy, based on data gathered by staffs at the nation's 12 Federal Reserve banks.

The government also will report on factory orders Wednesday.

Monday's gains were triggered following a speech by Federal Reserve Vice Chairman Janet Yellen. She said the U.S. central bank should press on with $85 billion in monthly bond buying, while tracking possible costs and risks from the program.

The Dow had  been down as many as 59 points on worries about a slowing Chinese economy before Yellen spoke. Oil prices moved lower and didn't recover.

The Fed's bond-buying program has ignited a fierce debate between economists, who believe the economy needs all the help it can get to recover, and critics who fear the Fed's policy will reignite inflation and destabilize markets.

The Dow came within 16 points of a new high on Thursday before profit-taking scuttled a sizable rally.

If the blue chips do hit a new high, a clear breakout for the market overall will come if the S&P 500 can jump past its 2007 high of 1,565, also set in October 2007. That may take a bit more time.

Nineteen of the 30 Dow stocks were higher on Monday, led by Wal-Mart Stores (WMT) and Home Depot (HD). Caterpillar (CAT) and United Technologies (UTX) were the laggards. Both are vulnerable to the political warfare in Washington.

Apple (AAPL) hit a new 52-week low at $419 and finished at $420.05, down $10.42. Google (GOOG) finished at $821.50, up $15.31 after hitting a new intraday high of $822.84.

Yahoo (YHOO) also hit a new 52-week high of $22.74 before settling at $22.70, up 76 cents.

Google has gained 16.3% this year; Yahoo is up 12.3%. Apple is down 21%.

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